What is corporate venturing perchance you ask? One definition is an “internal VC arm of a corporate” – although this hides some major differences with VC per se.

In London Fintech Podcast episode 48 I am delighted to welcome Ben Luckett MD of Aviva Ventures to dive into corporate venturing.

For the company doing it corporate venturing is a classic route to get exposed to innovation in a marketplace that’s moving faster than a large corporate can easily replicate itself. As an example The Economist wrote in this context about Intel’s venturing which has over 20yrs invested in more than 1,300 companies in 56 countries. Set against that the HBR points out that the median lifetime of a corporate venturing project is one year – so not all of them fly in the sky.

For the startup/scaleup corporate venturing it is a source of growth capital but it can, at best, feel not like a type of venture capital funds (which can come with plenty of winces as I see daily talking to Fintechs) but as a steadier, less profit-orientated perhaps, source of funds.

On the show we discuss all this and more:– the relevance of Big Green Eggs to Ben’s Easter – “one of the best things to have come out of the US in a long time”

– Ben’s career journey – in particular the experience and lessons from FS focus/panic re e-commerce in the ’90s which in many ways prefaces the whole Fintech journey today

– “each time it’s different but each time there are some common themes”

– mobile stockbroking App development via WAP in the 90’s as a forerunner of modern Apps

– why it has taken 20yrs to get from there to Fintech today

– online banking pre-internet browsers

– entrepreneurialism changes in the UK – over half-a-million new businesses last year (although how many of those are “real businesses” is unclear)

– the interface between startups and corporates – both having strengths and weaknesses; the importance of a two-way flow

– the impact of having an office in a garage in Hoxton; the impact of buildings both symbolically but also culturally; the importance of creating different environments in order to create different behaviours

– the two sides of the corporate venturing coin – what’s in it for the funder and what’s in it for the “fundee”

– for the funder:

the need to interact, collaborate, engage with and understand the marketplace in consumer and technology trends – by becoming an investor one gets much nearer to the market; Aviva believe there are some trends in play that will have a significant impact on their business model

looking to bring back into Aviva from investee companies – insight, opportunities, capability, technology and culture to (i) challenge internal business units thinking and (ii) to accelerate internal strategy by leveraging those investments

– this kind of approach is very common in other corporate sectors such as Pharma – it’s more of an anomaly that FS hasn’t done it so much in the past rather than that it is doing it more now

– how to be an MD aiming to meet mutliple objectives from corporate venturing; in Aviva’s case:

insight (far harder than it appears), translating this into a company (not a “weekly digest”) , “venture associates”

financial return

cultural transfer

“strategic partnerships of the future”

– for the fundee companies:

corporate capital is attractive as its not just about financial return but strategic aims

access to vast expertise, brand and distribution

deal-by-deal basis – networks and connections through to secondments through to commercial engagements

– need to ensure both firms are at the right stage, the right match in terms of aims, people fit, chemistry etc

– Aviva Ventures are planning to spend around £20m each year for the next five years

– their sectoral aims are deliberately not aligned with internal structure (so as not to constrain innovation and to focus more on clients than product)

– their four main areas for Aviva’s investment are:

radically different approaches that will align with their strategic interests – eg Internet of Things – eg & esp a model that avoids things going wrong rather than fixing them when they have – a “win-win proposition”